Ireland can be origin of next big thing

Some of the biggest names in the technology world graced Dublin with their presence last week to attend the Dublin Web Summit and the influential F.ounders conference, they got to meet Bono, the President and the Taoiseach. But most importantly, they shared their stories and their insights with Irish entrepreneurs and start-ups.

In attendance was Niklas Zennstrom, the co-founder of Skype who in recent months resold his company to Microsoft for US$8.5bn. Also present was Michael Birch, co-founder of Bebo and other top names in tech such as 4chan’s Chris Poole, Rovio’s Mikael Hed, Digg’s Kevin Rose and LinkedIn co-founder Eric Ly.

It is mesmerising when you think that some of these successes didn’t originate in Silicon Valley. Skype came out of Sweden, Bebo out of the UK and Rovio Mobile, makers of the Angry Birds game series, emerged from Finland. Who’s to say the next big thing might not emerge from Ireland?

Ireland's potential

I put this question to John O’Farrell, an Irishman who happens to be a partner at one of the most powerful venture capital firms in Silicon Valley. Andreessen Horowitz, founded by Netscape founder Marc Andreessen and Opsware founder Ben Horiwitz, holds stock in some of the highest-valued privately held social media companies, including Facebook, Groupon, Twitter, Foursquare and Zynga.

“I have met some interesting companies,” O’Farrell says. “I would say Ireland has potential. It is really important, particularly for a small market like Ireland to focus on gigantic markets up front and that usually means the US.

“Having a Silicon Valley and Irish presence is better than being pure Ireland-based, so maybe put your management team or some of them out in the Valley where they can tap into that ecosystem and put their development back here – that would be a model that can work and become very big.”

I ask O’Farrell is the ‘next big thing’ technology just around the corner or is everyone too focused on social? “It is, but the big question is what is it? Rather than being focused on mobile or social or local, we are much more focused on finding great companies.”

I then ask him if he thinks social has a sell-by date and if the bubble is likely to burst. “It really depends on the company. For truly great companies the market is so much bigger than it ever was before – 13 years ago, when Netscape sold to AOL, there were maybe 50m people on the internet, now there are 2bn.

“As a result, companies need a lot more capital and tend to stay private longer than they used to and that translates into high valuations for them. I personally don’t think it’s a bubble,” O’Farrell says.

Gut instinct

Philip Kaplan is an entrepreneur and angel investor based in San Francisco, California.

He has founded numerous tech companies such as Blippy, AdBrite and TinyLetter, and has invested in and advised numerous start-ups.

"The biggest thing I've learned is typically, nobody is smarter than you, the entrepreneur," Kaplan explains.

"A lot of people might come to an event like the Dublin Web Summit or they bring in certain investors who they think are really smart or ask advisers what to do and they take those ideas as gospel and try to implement them. The truth is nobody has the secret formula.

"It sort of sounds clichéd, but go with your gut. The only business regrets that I've had in life - and I think that this is the case for a lot of entrepreneurs - is when I went with somebody else's advice, even though it didn't feel right to me."

Indeed the very nature of funding start-up companies appears to be changing.

Birch has co-founded a number of technology companies - most famously, social network Bebo, which he and his wife Xochi sold to AOL for US$850m. He has also invested in numerous companies. He recently set up WaterForward, a fundraising website for Water.org to provide clean drinking water for developing nations.

"Overall, charities have raised about 5pc of their money online, which really is next to nothing. Charity Water raised 73pc of their funds online which is one of the highest in the industry. We want to be up in the high 90s, we think it's possible."

Social networking companies in Ireland

Ireland has been notably successful in terms of attracting some of the world's biggest social networking companies to locate here. Facebook came here with the intention of creating 40 jobs and now counts 300 people in the city. Twitter is locating here and other major names such as Zynga and LinkedIn are ramping up their operations in Dublin City.

Ly is full of praise for Ireland as a location for young Silicon Valley social media firms. The company's European headquarters in Dublin employs 100 people.

"I think there are many advantages to being in Ireland," Ly says.

"In Silicon Valley, there's seems a lack of technical talent to grow companies and for many decades now Ireland has really had a very solid technology base and it simply made a lot of sense for LinkedIn and other companies to be in Ireland and to leverage the talent here. Also, it's a great gateway to the European community."

Zennstrom, who now runs venture capital firm Atomico in London, believes Ireland is home to great start-ups and an investment in Irish tech firms is just a matter of time.

"If you look at this economic crisis and the last one, there hasn't been a big difference in terms of entrepreneurs starting companies," Zennstrom notes.

"If you're an entrepreneur or becoming one, you think you have a great idea. You don't think about if the economy's good or bad. But one big change is that when I started my company the first time over 10 years ago, people were saying that I was leaving my job, that I had a secure career and that it was a big uncertainty.

"Today, in a bad economy, people know there is really no job security so there's not as much risk trying to set up a company. In a way, it's good when the economy is a bit bad, it's stimulating entrepreneurs to start companies and try new things."

"When we were here last year, we saw several Irish start-up companies and we've had dialogue with a number of them. We haven't made any investments yet but that's just a matter of time because the number of investments we do each year is quite limited.

"There's certainly a lot of good talent here and there are people who are good entrepreneurs," Zennstrom adds.

John Kennedy and Laura O'Brien